Compiled by Leila Lai
CSE GLOBAL | BUY (MAINTAINED)
SEPT 11 CLOSE: $0.44
TARGET PRICE: $0.59
UOB Kay Hian, Sept 11
CSE Global remains upbeat about its outlook for the oil and gas business, which is starting to see more small-order wins.
As management looks to expand its presence beyond the Permian Basin and Eagle Ford through organic and inorganic initiatives, earnings growth momentum should be sustained with greater order intake velocity and growing order book.
With an eye on winning projects in Malaysia and North America, CSE is working in partnership with Serba Dinamik Holdings to become an approved service provider for Petronas. Meaningful developments within this space are expected to flow through within the next 12 to 18 months.
Since May 18, CSE has commenced share buybacks at an average of 47 cents a share, indicating management's confidence in the company.
Riding on strong tailwinds and supported by favourable strategic developments, CSE remains undervalued at 11.0 times 2019F price/earnings (PE) ratio with about 16 per cent of its market cap in net cash despite a consistently profitable business.
Reiterate "buy" with a PE-based target price of 59 cents, pegged to peers' average of 2019F PE of 15.0 times.
REAL ESTATE | NEUTRAL (MAINTAINED)
RHB Research, Sept 11
Last Saturday, we visited the JadeScape showflat, where we emerged reaffirmed that demand remains strong - if pricing and amenities are attractive.
We noticed that the developer has lowered the indicative sales prices by 10 per cent, in response to recent measures implemented by the government.
Overall, we maintain our flattish price outlook for H2, and expect primary transaction volumes to decline by 10 per cent year-on-year in 2018.
JadeScape (1,206 units, 99-year leasehold term) is the redevelopment of the former Shunfu Ville Housing and Urban Development Company estate, which QingJian Realty acquired in May 2016 for $638 million, or $747 per sq ft per plot ratio (psf ppr).
We estimate the break-even price to range from $1,250 to $1,300 psf ppr.
EdgeProp Singapore said in a report that as many as 9,000 people visited the showflat over the weekend. Comparatively, another recent popular launch, The Tre Ver, attracted about 3,000 people on the first day.
Based on the strong turnout and reasonable pricing, we expect a healthy take-up at the launch and estimate more than 200 units to be sold on the opening day.
Mayfair Gardens (387 units), a redevelopment by Oxley, is expected to be launched over the next few weeks.
The take-up rates at these two launches should help to sustain the primary sales volume growth momentum in September.
We see no near-term catalysts for players with larger exposure to Singapore's residential sector.
We prefer CapitaLand, as we expect it to see minimal impact from recent policy measures. It will also benefit from the continued build-up in recurring income base, and its diversified exposure.
The sustained momentum in new launches combined with higher developer commissions should also benefit Apac Realty.
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